EY: Global IPO activity rebounds sharply hitting historic highs in Q3 2020

• Market liquidity and investor sentiment drove deals and proceeds up year-on-year
• Technology, industrials and health care led global sector activity YTD with 537 IPOs raising US$110.5b
• Q3 2020 was the most active third quarter in last 20 years by proceeds and the second highest third quarter by deal numbers

Q3 2020 bucked the traditionally slow IPO period as travel slowed, work from home and the markets were awash in liquidity resulting in the most active third quarter in the last 20 years by proceeds, and the second highest third quarter by deal numbers. Globally, YTD IPO activity accelerated, resulting in a 14% increase in total IPOs to 872, and an impressive 43% rise in proceeds of US$165.3b.

IPO activity in the Americas saw 188 deals raise US$62.4b in proceeds, increasing 18% and 33% respectively, while Asia-Pacific saw 554 IPOs raise US$85.3b in proceeds, rising 29% and 88% respectively YTD. Both markets have already exceeded YTD 2019 levels. While the EMEIA region rose quarter over quarter, the region is still down YTD by 27% in IPOs (130) and 24% decrease in proceeds (US$17.6b). Cross-border IPO activity levels have held steady by deal numbers and proceeds, accounting for 8% and 10% of global IPO activity, respectively.

As for sectors, technology, industrials and health care once again topped the ranks. Technology saw 210 IPOs raise US$53.9b, industrials saw 168 IPOs raise US$23.3b and health care saw 159 IPOs raise US$33.3b. These and other findings were published today in the EY quarterly report, EY Global IPO Trends: Q3 2020.

Americas IPO activity picked up the pace in Q3 2020

IPO activity in the Americas gained momentum overall, seeing an 18% increase in IPOs (188 total deals) and 33% increase in proceeds (US$62.4b) YTD, exceeding 2019 YTD levels. While the health care sector dominates YTD in number of IPOs (71), the technology sector leads in proceeds, raisingUS$22.3b through the quarter in the Americas. The Americas have proven to be the birthplace of unicorn IPOs, launching 12 of 2020’s 18 IPOs in Q3 alone.

Asia-Pacific deal landscape grows stronger, window of opportunity remains open

YTD 2020 Asia-Pacific IPO activity has surpassed YTD 2019 activity by both volume (29%) and proceeds (88%). Activity in the region accelerated in part due to COVID-19 pandemic- related government stimulus policies.

EMEIA IPO market gains momentum to get back on track

Following a slower H1 2020, EMEIA IPO markets gained significant momentum in Q3 2020 with deal numbers increasing 34% and proceeds rising 49% compared with Q3 2019, due in part to several large IPOs in the region. The region’s big winners are those riding on the tech digitalization wave – in particular technology, industrial and health care sectors.

In Europe, markets are beginning to rally, with Q3 2020 IPO numbers up 48% and proceeds increasing 51% as compared with Q3 2019. At the same time, the UK IPO activity was a boon for EMEIA as a whole with a mega IPO demonstrating the available liquidity of the market and showcasing international investor interest for the right deal.

Q4 2020 outlook: expecttheunexpected

This year has been nothing if not unpredictable. As we move into the final quarter of the year, investors may look to lock in profits as soon as they see signs of market uneasiness. Globally, a divergence between economic well-being and GDP, and stock market valuations, are also causing anxiety among some investors. While there are some unknowns in the US-China trade tensions, the outcome of the US presidential election and uncertainties still surrounding Brexit, the outlook for Q4 remains positive with a healthy spread of deals in the pipeline across many markets. As long as the window of opportunity remains open, it is expected that deals will continue to be made.

Commenting on the findings, Stelios Demetriou, Partner and Head of Strategy and Transactions Services, EY Cyprus said: “Although market sentiment can be fragile, the scene is set for a busy last quarter to end a turbulent 2020 that has seen a strong IPO performance. The US presidential election, as well as the China-US relationship post-election, will be key considerations in future cross-border IPO activities among the world’s leading stock exchanges. Despite the uncertainties, companies and sectors that have adapted and excelled in the ‘new normal’ should continue to attract IPO investors.”